Patent protections for new drugs have ignited an unparalleled surge of innovation, significantly benefiting patients, and should be zealously safeguarded, according to a recent study, The Importance of Intellectual Property Protections for Patients, published by the Pioneer Institute.
“Patent protection is the catalyst for invention,” emphasized Dr. William Smith, who co-authored “The Importance of Intellectual Property Protections for Patients,” alongside Dr. Robert Popovian. “No innovator will invest their time, resources, and capital into an invention if, the moment it hits the market, others can seize the discovery, replicate it, and market it as their own.”
Historically, the federal government held patents on products resulting from government-funded university research projects, preventing universities from commercializing these breakthroughs. Consequently, drug advancements languished on shelves and remained inaccessible to patients.
This narrative changed with the enactment of the Bayh-Dole Act in 1980. This groundbreaking legislation empowered universities to retain patents on discoveries funded by federal grants and introduced intellectual property safeguards, ushering in a new era of innovation in the pharmaceutical industry. This milestone marked the first in a series of bipartisan laws that helped to revolutionize drug development.
Nonetheless, it is important to recognize that the federal government is not the sole, or even the primary, patron of drug discoveries. The private sector plays a pivotal role by funding clinical trials, which can cost upwards of $1 billion and often yield uncertain outcomes. For example, according to IQVIA, a biopharmaceutical consulting firm, the global success rate for oncology trials stands at a mere 3.5%.
Despite these discouraging statistics, the number of oncology trials surged by 22% in 2022, compared to 2018. Collectively, the pharmaceutical industry invests over $200 billion annually, dwarfing the National Institutes of Health budget, which reached $41 billion in 2022.
Dispelling misconceptions, it’s important to note that drugs under patent protection do not evade competition. Patents offer a shield of protection for a limited period before other companies can replicate and market generic versions of the drug.
For instance, in 1987, the U.S. Food and Drug Administration (FDA) approved lovastatin for high cholesterol treatment. Within a decade, at least four other cholesterol drugs received approval, each with its own patent. Fierce competition ensued, leading to declining prices.
Dr. Popovian commented, “Competition for brand-name medications doesn’t wait for the arrival of equivalent generic versions. A patented drug faces competitive pressures and price reductions throughout its life cycle due to the fierce rivalry among brand-name alternatives.”
The 1983 Orphan Drug Act offered incentives for medications targeting diseases with fewer than 200,000 patients in the U.S. Notably, it granted approved drugs seven years of exclusivity before potential competitors could gain FDA approval. When enacted in 1983, only 38 drugs existed for rare diseases. By early 2023, that number had surged to 1,100.
Intellectual property protections have also played a pivotal role in narrowing health disparities. Over the past three decades, the life expectancy gap between black and white populations dwindled from 7 years to 3.6 years. Research conducted by Dr. Tom Philipson at the University of Chicago estimates that medical and pharmaceutical innovation accounted for between 35 and 73 percent of this reduction.
The authors of the study argue that the most substantial threat to intellectual property rights materialized with the enactment of the Inflation Reduction Act last year. This legislation imposes price controls on 100 of the bestselling drugs in the Medicare program, irrespective of their patent status. New research suggests that the Inflation Reduction Act will lead to the absence of 230 drugs in the market over the next decade and potentially result in job losses ranging from 730,000 to 1.1 million.
Dr. Robert Popovian, Pharm.D., MS